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Home  /  News  /  What is a rental pool and how does it work? With an example of villa's rental.

What is a rental pool and how does it work? With an example of villa's rental.

What is a rental pool and how does it work? With an example of villa's rental. main image

A rental pool is a convenient investment program that allows for a steady income from leasing villas in Phuket. Opting for this approach entails sharing revenues with a management company, responsible for rental organization, maintenance, and marketing.

Income is distributed either annually, quarterly, or, less frequently, on a monthly basis, depending on the management company.

There are two forms of income distribution: sharing net profit or sharing gross revenue.

Net profit in Phuket refers to revenue minus expenses for maintenance, management, and marketing. The management company's commission, ranging from 20% to 40%, is then deducted. Consequently, your profit ranges from 60% to 80%, from which you must pay income tax and annual maintenance fees for the complex's common area. The remaining amount is your net profit.

Let's consider an example. A client purchased a 2-bedroom villa at Anchan Hills for $714,000 and entrusted management to Apart Homes Hospitality in an 80% to 20% profit-sharing ratio.

The villa was rented out for 299 days out of 365, resulting in an 83% occupancy rate. The actual gross revenue was $92,300, with $12,000 in villa maintenance expenses. Therefore, revenue after expenses amounted to $80,300.

After subtracting the 20% management commission, the owner's profit was $64,240. Additional owner expenses included a 15% income tax ($9,636) and annual maintenance fees for the Anchan Hills project ($2,860). In total, the year-end profit was $51,744, representing a 7% annual return relative to the villa purchase price of $714,000.

It's worth noting that income may vary based on villa location, size, and other factors, emphasizing the importance of selecting the right complex.

Any remaining questions?

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